How do I apply an environment map in Blender Internal?
Enable Real Sky in Properties > World to make the sky render relative to the horizon rather than the camera:



Optionally enable Environment lighting to use the sky texture to illuminate the scene.
Switch to the texture panel and create a new world texture by clicking new with the World tab selected:


Set the type to Image or Movie and open an image:


In Textures > Mapping set the projection to Equirectangular and enable Horizon in Textures > Influence:




Result: